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LONDON, Nov 22 Reuters British retail sales fell by much more than expected in October, according to official data that added to other signs of a loss of momentum in the economy in the runup to the first budget of Prime Minister Keir Starmer39;s new government.

Sales volumes dropped by 0.7 from September, compared with a median forecast for a 0.3 fall in a Reuters poll of economists.

The drop was the sharpest since June, when sales fell by 1.0 from May. A monthly rise in sales in September was revised down to 0.1 from a previous estimate of a 0.3 gain.

Sterling fell by about a fifth of a cent against the U.S. dollar immediately after the data before recovering.

The Office for National Statistics said retailers across the board reported that shoppers held back on spending ahead of the new government39;s first tax and spending budget on Oct. 30.

Momentum in the economy weakened in the months ahead of the budget with gross domestic product edging up by only 0.1 in the JulytoSeptember period, according to official data published last week.

Finance minister Rachel Reeves spared individuals from her heaviest tax increases, which fell instead on employers, and there were some signs that Britons have overcome at least some of their nervousness since the budget.

A consumer confidence…